Start your planning now as Gulf VAT framework published
In the UAE, the registration exercise of companies that are above the yearly threshold for VAT is expected to start in less than 3 months from todays the country gears up for implementing the 5 per cent levy from January 1, 2018.
There's no doubt that the journey towards the VAT rollout process is now gaining momentum.
It's an undisputed universal law that if you don't move with the times, the times move against you.
And with the recent publication of the GCC VAT framework agreement, there's no doubt that the journey towards the VAT rollout process is now gaining momentum. All the six of the GCC member states - Saudi Arabia, Qatar, Oman, Kuwait, the UAE and Bahrain - have now signed and approved the VAT framework.
In the UAE, the registration exercise of companies that are above the yearly threshold for VAT is expected to start in less than 3 months from today, as the country gears up for implementing the 5 per cent levy from January 1, 2018. Businesses that provide taxable goods or services, with annual revenue of more than Dh375,000 will be required to register, while businesses with taxable supplies below Dh375,000 but over Dh187,500 will have the option to register.
Now is the best time to start planning.
Managing the risk involved with VAT payments/reimbursements and other VAT related processes is key. At Crowe Horwath, we have started to run a series of countrywide workshops, aimed at equipping and arming professionals and business owners with the right planning tools to avoid 'last-minute' implementation rush. One of the major misgivings that finance teams are currently facing is operational confidence, particularly with regards to functioning issues such as; from which point they need to start planning for VAT and present their plan to their board or other stakeholders in the company.
During the workshops, participants are taken through some time-saving VAT tools, with some of the functionality elements including productivity tools that allow the user to create reports and memoranda, charts and tables, make comparisons, compliance checklists, compare compliance rules across jurisdictions, and access key tax forms in either Arabic or English.
The workshops build from the absolute VAT basics through to some of the more complex issues such as exemption and internationally traded services. Given the importance of the GCC VAT framework agreement, the workshops are also offering insights into the specific issues that apply to trade between GCC Member States.
Granted, we expect businesses to face some hurdles and challenges at the initial phase of the VAT implementation. These complexities will be dealt with as we move along. To put this implementation scenario into perspective, we could form a comparison to the 2007 introduction of the Salik road toll-gates in Dubai.
Salik, as we know it today, is not the same as it was when the system was first introduced into the country. Initially, there were bumps and hurdles on the road to overcome, so to speak, but currently the benefits of the road toll are being seen and enjoyed by all road users.
Just like the Salik scenario, with the VAT, the government aims to achieve critical mass at first, to ensure that the benefits of the tariffs are achieved at a sustainable level next year and in the years to come. When VAT is introduced, we will continue to provide information and education to businesses to help them make the transition smooth.
The writer is Crowe Horwath's VAT Services Team Leader. Views expressed are his own and do not reflect the newspaper's policy.